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Recently I had a call from a reader concerning Social Security. His call related more to the disability side of the Social Security program.

The caller was disappointed that he had learned he had not paid in enough periods to qualify as a recipient of Social Security Disability Insurance. He was disappointed but was clearly explained the answer by staff with the Social Security Administration. His call and a farm visit last winter pushed me to do some research about the Social Security program.

We all hear the news reports about the pending crisis in funding for the program. In 2015 Gallup Poll found that 64 percent of millennials do not believe the program will be able to pay benefits when they retire. Yet, today we have over 50 million people collecting retirement and survivor benefits and 10 million collecting disability payments.

The Social Security Trust Funds are the Old-Age and Survivors Trust Fund and the Disability Insurance Trust Fund. The OASI Fund began in 1937, and the DI in 1957. The funds are managed by the Department of The Treasury. In 1972 the automatic cost of living adjustment was added to provide inflation protection.

In Wisconsin, it is estimated 20% of the population is receiving Social Security benefits, and the average benefit in 2014 was $14,847 annually. This amounts to $17 billion annually to the Wisconsin economy.

In 2014, 161,894 Wisconsinites were provided disability benefits with an average annual benefit of $12,887. In rural Wisconsin counties 1 out of 4 received Social Security benefits in 2014, and payments made up 9.1% of the personal income in rural areas.

Several Wisconsin counties have over 30% of the population receiving Social Security benefits: Adams, Bayfield, Burnett, Door, Florence, Forest, Iron, Marquette, Oneida, Pepin, Price, Shawano, Vilas, and Washburn.

According to AARP, for Wisconsinites over the age of 65 there are 3 out of 10 that rely on Social Security for their only source of income. For 66% of Wisconsinites over the age of 65 Social Security makes up more than 50% of their income.

How does the Social Security program impact production agriculture in rural Wisconsin? According to the financial advice column Motley Fool, the United States Labor Statistics estimated the basic cost of living at $3036 per month in 2014. Rural families, whether young or elderly, need funds to provide for the cost of living. If Social Security payments to a retiring farmer or landowner do not cover the costs of living, it requires lowering the standard of living or drawing funds from other sources. Those sources could be off farm investments, off farm income, continued operation of the farm, rental income from the farm, and other retirement funds such as a pension or 401K.

Financial and social stresses can impact an area due to lack of financial resources for those moving into retirement. Farmers may delay retirement due to less than adequate Social Security benefits with the hopes that the farm will supplement the monthly Social Security benefits. Others may rent farmland to other operators but would be strongly reluctant to drop land rental rates due to the need to support family living expenses.

Multi-generation farms can also be challenged when the retiring generation needs the withdrawal of funds from the farm to supplement the retirement of those easing out of the operation and management. The continued growth of a farm operation may prevent the accumulation of off farm investments that would allow for the support of those retiring from the farm operation.

Many believe that Social Security can provide for a lifestyle that has been experienced in the past. Long periods of low profits may not allow for the farm operations to provide such things as it has in the past such as housing, vehicles, and cash draws.

Rural Wisconsin’s aging population will continue to have a greater percentage of the population collecting Social Security benefits. With projections of the Trust Funds falling short of adequate resources by 2034 there could be a major crisis for rural Wisconsin. Residents in rural Wisconsin will need to develop a plan to fund their own retirement in greater amounts than in the past. It is predicted that payments from Social Security will need to be lowered by $5,800 annually if no action is taken to address the pending funding crisis.

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